Forcefully Delicious Cookies Cashflow Analysis Assignment

FDC has decided to offer Unicorn Cookies. We paid a non-refundable, $120,000 for a marketing survey to help us understand food trends prior to settling in on Unicorn as the next new cookie option. FDC thinks that the new cookie will generate $300,000 in incremental revenue in year 1 year and revenue will grow at 6% . Fixed costs will be $125,000 per year, and variable costs will be approximately 30% of sales (lots of food coloring). The capital investment in the equipment needed to produce the new cookies will cost $200,000 and will be depreciated in a straight-line manner for the 4 years of the cookies life (if you think unicorn will really last that long). The change in net working capital will be the following, year zero= 10k increase (stocking up on the ingredients, etc), year 1= 20k increase (really ramping up), year 2= 5k decease (beginning to get paid), year 3 = 10k decrease, year 4 = 15k decrease. The firm a marginal tax rate of 21%. The required rate of return on projects with similar risk is 9%.

Please calculate the Net Income for all 4 years as well as the NPV

b. What if fixed costs decreased by 15%, but the initial investment went up by $100,000

c. What if revenues grow by 10%